3 March 2026

We’re all trying to find the guy who introduced these student loans!

Everyone remembers the Conservative Party created this system

Britain’s student loans scandal is finally becoming a mainstream cause. We can be cheered by watching Kemi Badenoch using it on Keir Starmer in PMQs, or engage in a weirdly fraught shouting match with Martin Lewis on Good Morning Britain, even if we’d be forgiven for picturing an arsonist pitching up to the blaze they themselves started with a shot glass filled with water.

The Conservatives are, after all, well placed to know a lot about this morass, since they introduced it. In 2012, the coalition government launched the Plan 2 system of student loans and raised university fees across Britain to £9,000 per annum. To put Plan 2 in simple terms, loan repayments were laid out via a seemingly innocuous series of calculations. The first to consider is the threshold at which repayments begin. If you left education with, say, £27,000 worth of debt, you would only start paying it back once you met a predetermined salary. On its face, this might not seem like a particularly onerous demand. “Low-earning” graduates would avoid being saddled with repayments before they were financially able to begin making them, while their “high earning” peers could start chipping away at their debt, and provide an income stream for the state.

As any of my fellow literature or history graduates will tell you, however, the devil is in the details. For one thing, the threshold at which someone becomes a high earner was never particularly high and, following years of inflation, is now preposterously low. Rachel Reeves’ announcement that the government are freezing the threshold at April 2026 levels (£29,385) for a further three years only makes this worse. The real living wage for London is currently calculated at £28,860, which means that any London-based graduate making just £40 more per month than the minimum needed to live there will automatically begin paying their debt. In real terms, this means practically any graduate in any form of full-time work will be paying as much as 9 per cent of their income to the state, and for a very, very long time. Worse still, the amount owed by those graduates below the threshold does not remain static – it accrues interest, year on year, whether you’re working for low wages, volunteering, taking a career break or on maternity leave, ensuring that if you do pass the threshold some time later, you will be returning to find your original £27,000 much enlarged.

If the state’s attitude to what constitutes “high earnings” makes you think it’s oblivious to the concept of inflation, let me put your mind at ease. When it comes to the calculation of student loan interest, they are very conscious of inflation indeed. Each year, the interest charged on student loans is calculated by two components. The first is the Retail Price Index (RPI), which generally records a higher number than the Consumer Price Index (CPI). Governments prefer the latter, lower figure for many of their other calculations, just not when it comes to adding extra debt to every graduate in the country. To this is added a second component, a percentage tied to each graduate’s earnings, meaning that as your salary increases so too does the interest you’re paying on the loan you took out. If you think this seems like a predatory and punitive way to bilk students for as much money, and over as long a period of time, as possible, then you’re just about up to speed on this scandal, which amounts to a regressive stealth tax on every graduate in the UK. One which, it’s calculated, you would need to be earning £66,000 per year to pay off in anything like a timely fashion.

The human effects of all this should be obvious: the price of going to university increasing sharply at precisely the point of British history when the vast majority of career-track jobs began demanding university degrees; millions of young people servicing onerous debt just for the crime of pursuing the education they were instructed would give them a better life; a debt calibrated with such high interest that many of those students will see the amount they owe increase, even as they pay it off for years.

And then there are the ancillary consequences. For one thing, it forges a two-tiered system of debt servitude, in which lower- and middle-earning graduates are saddled with decades-long overpayments, while rich graduates – or their parents – can evade them entirely by clearing the outstanding debt with large lump sums. Worse, this breeds a chilling calculus for less well-off students, and their parents, who must now wonder whether the price of going to university at all has become unfeasibly high. This is most pronounced in courses which have the lowest degree-to-earnings ratio, and risks making the humanities, languages, art, music and vocational degrees even more of a play-pen for the rich than they are already. These, we might observe, are the very same courses which tireless campaigner Kemi Badenoch now describes to Martin Lewis as “not worth the money”.

The fault for the threshold freeze lies with this government, and proper political pressure from any direction should be welcomed. But grandstanding from the Conservative Party which created this system, and refuses to offer coherent solutions, won’t get us very far. Nibbling at interest rates will make little difference to the harms caused, as any economics graduate will tell you. I just wouldn’t ask one right now. They likely have other things on their mind.